Beginning in 1765, lumber and grist mills were established on Mill Street, with taverns built soon thereafter on Parade Street. About 1822, the courthouse was built, which would become county seat at the creation of Belknap County in 1840. In 1832, the Belknap Mill was built to manufacture textiles; largely unaltered, the structure is today a museum listed on the National Register of Historic Places and is the oldest, unaltered brick textile mill in the country. Local industry produced lumber, textiles, shoes, hosiery, knitting machinery and needles. But the city's largest employer would be the Laconia Car Company, builder of rail, trolley and subway cars. Started in 1848, it lasted until the 1930s. The railroad entered town in 1849, carrying both freight and an increasing number of summer tourists to popular Weirs Beach.

In 1855, Laconia was incorporated as a town from land in Meredith Bridge, Lakeport, Weirs and part of Gilmanton. The name was probably derived from the old Laconia Company, formed by Captain John Mason and the Masonian Proprietors to sell parcels of land during the colonial era. The Great Fire of 1860 destroyed most of Main Street from Mill to Water streets, followed by the Great Lakeport Fire of 1903, a blaze so fierce that fire companies were brought by train from as far away as Dover. Laconia was incorporated as a city in 1893.